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‘All cash’ real estate purchases garnering more scrutiny

On Behalf of | Aug 8, 2017 | White Collar Crimes |

Home renovation shows are arguably as popular as they have ever been. Perhaps it is the market driving their notoriety as in Michigan there are a number of distressed properties for investors to purchase and renovate.  One could say that better economic conditions have created a resurgence of “flipping” houses.

An integral part of this process involves purchasing distressed properties with cash. Despite how lucrative flipping can be by using cash, some may think that such purchases are a ruse to hide money earned through illegal activities (e.g. drug trafficking). This notion has grown to a point where the Financial Crimes Enforcement Network (FinCEN) has issued several Geographic Targeting Orders (GTOs) in an effort to identify, and possibly investigate, these buyers. 

The orders require title insurance companies involved in these transactions to identify persons who own the companies that make high-end cash purchases. Indeed, most real estate investors buy distressed properties that need a great deal of renovations for pennies on the dollar, but it is not uncommon for some projects to involve some high end properties where the building or dwelling simply needs to be updated to justify top dollar.  But because about a third of all cash buyers who purchase high end properties have shown up on recent suspicious activity alerts, additional scrutiny has been given to these transactions.

As experienced criminal defense attorneys, we understand that cash purchases for high end real estate, by themselves, do not mean that criminal activity is afoot. Nevertheless, an experienced white collar crime defense attorney can protect the right for an investor to use their substantial wealth on such real estate projects to generate a profit.

The preceding is not legal advice.